Center for Advanced Study & Research on Intellectual Property

CASRIP Newsletter - Fall/Winter 2009, Volume 16, Issue 1

I. Introduction

Prior to Proveris Scientific Corp. v. Innovasystems, Inc., courts had broadened the safe harbor protection under 35 U.S.C. § 271(e)(1) for infringing acts in drug and medical device development.2 In particular, Merck KGaA v. Integra Lifesciences I, Ltd. extended § 271(e)(1) safe harbor protection to the use of patented compounds in pre-clinical studies as long as there was a reasonable belief that these studies would provide relevant information to submit to the Food and Drug Administration (“FDA”).3 Unlike Merck, Proveris provides limits on § 271(e)(1) safe harbor protection by holding that this exemption does not apply if the accused device is not subject to FDA pre-market approval.

II. Facts and Procedural History

Proveris Scientific Corporation (“Proveris”) owns U.S. Patent No. 6,785,400 (the “’400 patent”) for a system and apparatus characterizing aerosol sprays used in drug delivery devices.4 Under the Federal Food, Drug, and Cosmetic Act (“FDCA”), inhaler-based drug delivery services require approval from the FDA.5 The system and apparatus, however, are not subject to FDA approval.6 Innovasystems, Inc. (“Innova”) makes and sells the Optical Spray Analyzer (“OSA”).7 While the OSA is used in connection with FDA regulatory submissions, the analyzer itself is not subject to FDA approval.8

Proveris sued Innova in the District Court of Massachusetts for patent infringement.9 Innova argued that the safe harbor provision of the Hatch-Waxman Act in 35 U.S.C. § 271(e)(1) immunized the company’s allegedly infringing activities because third parties used OSAs solely to develop and submit information to the FDA.10 The district court ruled in favor of Proveris and held that the safe harbor provision did not immunize Innova from infringement of the ’400 patent.11

III. Federal Circuit’s Analysis

In affirming the district court’s ruling, the Federal Circuit emphasized “the overall statutory structure and underlying policy considerations leading to the enactment of the Hatch-Waxman Act.”12 In doing so, it highlighted the symmetry between 35 U.S.C. §§ 156 and 271(e)(1).13 The Federal Circuit also discussed how the Hatch-Waxman Act sought to eliminate two unintended distortions, de facto patent term reduction and de facto patent term extension, of the FDCA.14

Prior to the Hatch-Waxman Act, the de facto term reduction adversely affected patentees while the de facto term extension adversely affected parties seeking FDA approval to enter the market to compete with patentees.15 35 U.S.C. § 156 addressed the de facto patent term reduction by extending the patent term for “patents claiming a ‘product’ subject to regulatory delays caused by the FDA premarket approval process.”16 35 U.S.C. § 271(e)(1) addressed the de facto patent term extension by “providing a safe harbor that immunized competitors from infringement on account of making, using, offering to sell, or selling within the United States or importing into the United States a ‘patented invention . . . solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.’”17 While previous cases18 had broadly interpreted “patented invention” and “reasonably related” in § 271(e)(1), Proveris narrowed the scope of this provision.

In Proveris, the Federal Circuit deemed that Innova was not “within the category of entities for whom the safe harbor provision was designed to provide relief” for two reasons.19 First, Innova’s OSA was not subject to FDA pre-market approval.20 Only the aerosol drug delivery product whose spray plume characteristics the OSA measures required FDA approval.21 Therefore, Innova was not a party who sought FDA approval for a product to enter the market to compete with patentees.22 Second, Innova could not have been adversely affected by de facto patent term extension prior to the enactment of the Hatch-Waxman Act.23 Its OSA was not subject to FDA pre-market approval and did not face any regulatory barriers to market entry upon patent expiration.24

Similarly, prior to the enactment of the Hatch-Waxman Act, Proveris could not have been adversely affected by de facto patent term reduction.25 Proveris was not “a patentee who would have been faced with a reduction of effective patent life caused by the FDA approval process” because the invention claimed in the ’400 patent was not subject to FDCA pre-market approval.26 As such, it did not qualify for patent term extension under 35 U.S.C. § 156(f).27

IV. Industry Impact of Proveris

Proveris limits the scope of § 271(e)(1) safe harbor protection and appears to favor research tool patent owners and companies over drug manufacturers. As defined by the National Institutes of Health Working Group on Research Tools, research tools include “the full range of resources that scientists use in the laboratory.”28 Research tool patent owners are likely to rely on this case to increase enforcement of their patents.29 In addition, research tool companies may be more likely to attract investors since the safe harbor exemption will not apply to patented devices that do not require FDA approval.30

Proveris, however, may increase drug development costs for drug manufacturers if the research tool in question is the only available means to discover a drug.31 Should a drug manufacturer use the research tool in this situation, a research tool company may sue the drug manufacturer and argue for significant damages since the drug manufacturer is unlikely to discover the drug without the patented research tool.32 To avoid such a lawsuit, the drug manufacturer may take a license under the patented research tool.33 Consequently, these licensing costs may increase the drug manufacturer’s drug development costs.34